Defamation occurs when someone makes a false statement of fact that injures the reputation of another person. The vast majority of defamation lawsuits settle well before trial. In this article, we’ll discuss what to expect when it comes to settling a defamation case.
Defamation cases, like most civil cases, settle outside of court. In fact, some states require some sort of alternative dispute resolution (ADR) prior to trial.
There are many reasons why lawsuits settle. Lawsuits can be expensive, the outcomes are unpredictable, and resolution of a lawsuit can take a very long time. Though these reasons are common to litigation in general, they apply to defamation to a greater degree because defamation is so factually based. This means that, in order to build your case properly, you will have to spend a lot of money developing the facts of the case -- what happened and how -- by hiring experts, deposing witnesses, and researching the facts and law.
A settlement is best reached before the lawsuit is filed or after the discovery period is complete. A lawsuit can be settled through negotiations between you (or your attorney, if you are represented) and the defendant (or his or her attorney, if represented by one). Additionally, a case may be resolved with the help of a neutral third party, by way of mediation or arbitration.
Negotiation. A negotiation is a direct interchange between the parties in an attempt to reach a compromise. Negotiation is at the core of the ADR process.
Mediation. A mediation is facilitated by a neutral third party. Mediation is also non-binding. There usually is a fee for mediation and the cost will vary depending upon where the mediation is held and the reputation and skill of the mediator.
Arbitration. An arbitration is similar to a mediation, with the exception that the proceeding is more formal and the arbiter’s decision (aka “award”) is legally binding and enforceable against both sides.
Arbitration costs more than mediation, however, but also costs much less than trial. Costs are typically split between both sides. If the arbitration is mandatory (i.e., because of a contract), there are situations where the party seeking to compel arbitration will have to pay for all the costs except for the costs that you would be liable for if you brought the case to court.
Most lawsuit settlements will include a confidentiality clause. This clause will ensure that the terms of the settlement cannot be revealed to the public.
This is probably your first question. Unfortunately, there is no simple answer. Obviously, the plaintiff will want to receive much more than the defendant is willing to pay.
The best way to reach a number that both parties will be happy with is to calculate damages suffered as a result of the defamation. Calculating damages depends heavily on the facts of your particular case and can be very complicated. In fact, if the damages are great or complicated, you might want to consult with an expert.
Begin by calculating the actual damages. This includes the losses you may have suffered with respect to your property, business, trade, profession, or occupation -- including any expenses paid as a result of the defamatory statements. Since this is a tort cause of action, damages such as emotional distress are compensable.
Next, if applicable, discuss the availability of presumed (or assumed) damages. Furthermore, discuss the availability of punitive damages. Punitive damages are damages meant to punish the defendant for particularly egregious conduct. Punitive damages can potentially increase your award by a factor of 3 or 4. Finally, if attorney’s fees are authorized in your state, you should include that as well.
Next, add up the damages that you have listed in the above section. At this point, it may also be a good idea to supplement your damage analysis with awards or settlements from other defamation cases. To do this, consult databases of past jury verdicts. Usually a combination of a Westlaw or Lexis search, along with some other book or online resource will be sufficient.
Then, discount the total you've come up with, because of the amount of time, costs, and risk that you will not have to incur by settling early. Be cautious that you do not choose a number so high that your settlement efforts will never get off the ground. At the same time, do not go so low as to undervalue your case or signal to the defense counsel that you are simply chasing a quick settlement.
For an overview of the process and some important tips, see this starter page on negotiating a civil injury case.